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Pay Yourself First

Most people today only save about 4 percent of their income. That means they are only working 22 minutes a day for themselves. If you're serious about finishing rich, you need to change this behavior. By making small, incremental improvements to your savings, you can win big.

You should Pay Yourself First, at least one hour's worth of income every day," David Bach writes. "(Another way to put this is to say that you should Pay Yourself the First 12.5 percent of your gross income, but an hour a day is easier to remember.)

The key is making your saving automatic by "paying yourself first." In other words, pay yourself before you pay the mortgage, the credit card company or even your taxes. And make sure it happens automatically each month so you don't have a chance to put that retirement money toward new shoes or golf clubs.

The government pays itself automatically each time you get paid. Taxes are taken out of your salary before you even get your check. You should arrange for money to be taken from your salary and put into a retirement account before you ever get to see it. Most employers make this easy through a 401(k) plan. Sign up and you're well on your way to retirement.

How to do it:Very simply, however you receive your income, take 10% off the top and put it away in a savings account. Don’t touch it. When you get your check, either do it yourself right there at the bank, or have it done automatically by whoever is doing your direct deposit, set up a saving account to have 10% automatically direct deposited there.You must be paid first, and every single time you get paid.

For some, starting to pay yourself before you have paid off your debt may seem counter-intuitive. Why save before paying off debt? Because if you don’t save first, you’re not going to be able to cope with unexpected expenses. Do not tell yourself that you can keep a credit card for emergencies. Hide your credit cards; USE CASH for emergencies.

How much should you save? Ideally, you’d save $1,000 to start. This money is for emergencies only. It is not for beer. It is not for shoes. It is not for a Playstation 3. It is to be used when your car dies, or when you break your arm in a touch football game.

Keep this money liquid, but not immediately accessible. Don’t tie your emergency fund to a debit card. Don’t sabotage your efforts by making it easy to spend the money on non-essentials. Consider opening an online savings account. When an emergency arises, you can easily transfer the money to your regular checking account. It’ll be there when you need it, but you won’t be able to spend it spontaneously.

We are taught this principle by God himself, don’t forget to give 10%, this idea frees us from gripping tightly to our money. It reminds us from where all things come and we are only borrowing them for awhile.